Motorists will be forced to have spy in the car technology which will track their speeds and other driving habits or face sky high insurance premiums.

The devices, similar to the black boxes on aeroplanes , will be fitted as standard on all new cars under EU regulations from October next year.

The so-called “telematics” technology will enable insurers to keep track of how fast their customers drive, how hard they brake and how many journeys a year they undertake.

If they refuse to take part, drivers will face huge increases in their annual insurance premiums.

Research by the industry predicts that about half of all cars - including used vehicles - will be fitted with the spying devices by 2020,

Andy Watson, chief insurer of the Ageas Group, said: “The ability to have telematics will become mainstream because the technology will be in the car. It means the amount of data available to insurers increases dramatically.”

Tom Ellis, of the comparison website Gocompare, said: “In ten years time there will still be customers who prefer not to have a telematics device installed but it will be an opt out situation rather than an opt in.

“There will be reasons for people opting out - perhaps because they are bad drivers, or unhappy with the privacy element or have an old car but they will have to accept a higher premium to insure their car.”

The device was originally invented to help the emergency services track down crashed vehicles.

Pete Williams, of the RAC, said that motoring organisations felt that the introduction of the devices was inevitable.

He added: “We are working with the industry to make sure control of such data is retained by the individual motorist but for the vast majority of motorists it will be a good thing with regard to things like safety and vehicle recovery.”

The Department of Transport commissioned research into telematics earlier this year and a spokesman said: “The research will help us build a better understanding of how it can influence driver behaviour.

“We want to see how effective it can be in improving driver behaviour and reducing accident risk.”